According to statistics from the Bank of Thailand, new home registrations in the Bangkok metropolitan area rose 52.9% last year to 50,590 units. The figure rose 36.3% year-on-year in the first half of this year at 26,074 units, and 47.5% to 5,231 units in July.

Fundamentals today are different

Substantial growth has also been seen in construction permits and property transaction values (see table).

Policymakers have been monitoring the activities in the property sector closely to ensure a steady rise of asset prices and the soundness of the banking system. After all, it was a crash of asset prices that led to the financial crisis in 1997 in Thailand and across the region, where property accounted for a huge amount of loan portfolios.

M.R. Pridiyathorn Devakula, the central bank governor, said he was comfortable with the health of the property sector so far, as it was growing steadily and did not exhibit any dangerous signs.

"The property market is growing at a normal rate. We can see from the fact that prices rose 14% [according to most recent figures] that there has been no bubble within the sector. The business is going well and activity is moving ahead gradually," he said.

In a bid to encourage more prudent property lending, the central bank has introduced rules to limit lending to buyers at only 70% of the price of units costing more than 10 million baht. It also requires banks to submit cash flow projections and collateral of developers for lending worth more than 100 million baht.

Central bank officials say it could be misleading to base claims of a bubble on the growth of bank lending, since the rise has been from a very low base, given the almost total absence of new property development from 1998 to 2001.

Banks' total lending is still much lower than the 938 billion baht recorded in 1997, when lending through the well-intentioned but poorly supervised Bangkok International Banking Facilities was heavily channelled to the property sector.

Luxury condominiums have come up with increasingly spectacular offers such as private swimming pools in each unit, driving prices up.

As well, policymakers point out, substantial pent-up demand has been able to absorb new property supply, in contrast to the oversupply in the period before the economic crisis. There has been a huge increase in new supply in the past three years, but the amount is still lower than in the past boom.

One official said developers had also learned the lesson and become more careful.

Pongsak Chewcharat, the director of the Real Estate Information Centre, said the fundamentals of the property business were currently different from the pre-crisis era, given that unit transfers were still only 20-30% as much as the levels seen in 1995-97.

As well, rapid price rises have been confined to specific segments such as condominiums in the central business district. And the trend did not show unsustainable growth of the overall industry.

"To assess whether there is bubble in the property sector, one needs to look at whether buyers would have enough purchasing power to catch up with rising prices and whether prices would be forever on the rise," he said. "It takes a long time for a home-buying decision to be made. For now, I think the markups in price are concentrated in some areas, and are unlikely to spread widely."

Mr Pongsak said he was confident that growth in the property sector would be more solid, given that the decisions of developers would be based on data related to real demand, as provided by the REIC.

At present, the REIC is offering indicators including on housing permits, completions, transfers, a housing price index and housing finance. It plans to release home sales and housing starts data in the first quarter of next year.

Analysts said the trend for price adjustments in some segments had been looming, given the steady rise in prices of construction materials such as cement and steel, driven by demand and the government's anti-dumping measures.